Permanent TSB enjoys fruits of strategic supplier management

As one of the leading retail banks in Ireland, Permanent TSB (PTSB) is in the vanguard of businesses who see procurement as a means to deliver strategic advantage. 

PTSB’s values have remained unchanged through time. It prides itself on its customer service and traditional, personal approach to banking, which is why its branches remain a common sight on the high streets of Irish cities. Yet these same values are also driving it into a digital future, so it can meet modern business and customer demands.

PTSB sees change not as a problem, but as an opportunity, which is why it embraced the digital reinvention of its procurement function with such passion and focus that the bank has become a poster child for digital transformation, winning two prestigious industry awards.

At the National Procurement Awards, held in Dublin on September 15, PTSB won two awards: Best Transformation Project and Best External Collaboration Project. 

A key figure behind the award wins is Rachel Dolan, a dynamic and transformational leader in her role as Head of Procurement and Supplier Relationship Management for PTSB. 

Dolan is a straight-talker, a trouble-shooter and problem-solver who has not only designed and delivered cost savings, but has also implemented risk and governance frameworks to support enterprise goals. She is a graduate of both Trinity College Dublin and University College Dublin.

In a 15-year-career, Dolan has developed deep expertise and experience across retail banking operations, service and product development, and organisational design and transformation. 

Her programme and change-management expertise – coupled with a strategic approach to organisational and process improvement – made her the perfect candidate for overseeing one of the most ambitious procurement transformation projects undertaken by any bank in recent times. 

Dolan was tasked with delivering a cost optimisation programme, coupled with the transformation of the processes and technology supporting the entire source-to-contract journey.

Traditional banking in a digital era

“While we are probably one of the only banks anywhere expanding our branch footprint we also plan to satisfy our customers’ appetite for more digital banking,” says Dolan, who adds: “What sets us apart is we want to be part of the communities we serve. We want to remain as a physical bank, with branches where we can meet people and serve their day-to-day banking needs.

“Supporting customers and our community is our highest priority, and the procurement team purchases everything we need to serve our customers, such as ATM machines, cash-in-transit services, docket slips, and printed materials. We also procure to serve the needs of employees, including canteen and security facilities, as well as uniforms.” 

The Permanent approach to procurement

PTSB’s old-school-new-school approach to banking puts it in a unique position when it comes to sourcing, for not only is it tasked with maintaining and developing traditional banking infrastructures, it is also fully embracing the digital world. 

“Technology purchases are high on our agenda as we develop and grow our digital solutions,” says Dolan.

The Bank has enlisted the support of its partners to ensure that its roll-out of technology is seamless and meets the needs of customers. A key partner in its digital transformation journey has been Infosys and its digital banking product, Finnacle. 

“Around 80% of our spend is on technology and professional services,” explains Dolan. “This helps us deliver better, leaner and more effective customer journeys through digital applications.”

But PTSB’s digital ambitions go beyond servicing the needs of customers; it is also undergoing an internal digital transformation to help it leverage the power of procurement in delivering strategic advantages.

Enter its award-winning digital transformation project, called Titan: One Team, One Target. To deliver this, PTSB teamed-up with Efficio, the world's largest strategic, tech-enabled procurement and supply chain consultancy, operating across 13 offices in Europe, North America and the Middle East. 

Titan was born out of PTSB’s need to find significant savings across its third-party spend, and, in just over a year, Efficio had helped it deliver annualised savings of €12mn, much of which sprung out of Titan’s consolidation of PTSB’s large and disparate supplier landscape.

“This enabled us to secure the most competitive resources from selected partners across high-spend categories,” says Dolan. “For example, the IT reseller landscape was consolidated from 12 to 2 providers, and the IT consulting and development supply base from 29 to 10 providers.

“The approach that our joint PTSB-Efficio procurement team took not only established unprecedented visibility of supplier rates to ensure consistent application across all business areas, but it also encouraged greater collaboration between PTSB and its vendors.”

Dolan says the bank’s procurement team identified several separate, critical projects that were engaging the same key vendors.

“By collaborating with the relevant business stakeholders, we were able to forge strategic partnerships to optimise the commercial model,” says Dolan.

“We undertook a coordinated effort to revise the approach to contracting. We led commercial reviews, seeking outcome-based fixed fee contracting models, and, on the supplier relationship management front, we also helped facilitate closer integration between parties.” 

The significant savings delivered by Project Titan meant that the project also succeeded in another vital area: changing the perception of procurement within the bank. Now, it is no longer viewed as an administrative function but as the bank’s preferred partner in driving competitive and strategic advantages through data-driven cost control.

The programme followed a three-phase delivery roadmap over 12 months: Waves 1 and 2 comprised 34 initiatives, while PTSB expects a further €2mn in savings from Wave 3.

To meet the challenge, the joint PTSB-Efficio procurement team got their collective shoulder behind the ‘One Team, One Target’ ethos. This partnership approach saw both parties jointly define strategic recommendations and deliver against the targets. 

“The delivery model was not typical of a consulting engagement,” says Dolan. “It is more usual for consultancy services to be advisory, with the client executing on recommendations. But, with Efficio, we established a supportive, trusting relationship, and the two procurement teams presented as a single collaborative function to the wider business.”

That the project was delivered mid-pandemic, with all parties working remotely, makes the achievement all the more impressive. But COVID-19 was not the only challenge. To be successful, Project Titan also had to win over PTSB staff.

“Most colleagues were not cost-conscious at that time, and they saw Project Titan as a threat, rather than a means of support for them to reach their own objectives,” says Dolan. 

To persuade the doubters, Project Titan leaders worked hard to first understand, and then realign, the prevailing corporate mindset. 

“Through a range of stakeholder interviews, we gained a clearer picture of the biggest pain points,” says Dolan. “Bringing the business along on the transformation journey was vital to its success.”

She says that, because Titan leaders involved stakeholders, the changes they introduced “felt familiar, and the business developed a greater appreciation of procurement”. Key to this process were a number of strategies, one of which was proactive outreach across different areas of the bank.

“This meant we were able to develop a pipeline of procurement initiatives, which allowed us to mobilise the resources we needed to deliver on our need to source strategically.” 

Dolan says these new ways of working are now embedded across the Bank and that they will be finessed as the ongoing relationship with Efficio continues to evolve.

Dolan says the collaboration has delivered improvement to PTSB’s procurement function in areas, including: 

• In-house expertise – “Efficio subject-matter experts were available on demand across different initiatives,” says Dolan. “We leveraged their internal benchmarks so we had ‘should-cost’ benchmarks for supplier negotiations.”
• Strategic sourcing – “Implementing Efficio’s strategic sourcing methodology revitalised the cost-savings agenda,” Dolan says. “It established cost baselines and analysis of relevant supplier markets, which helped us develop creative sourcing strategies.”
• Embedding new technology – Dolan says: “The communication tools in Efficio’s proprietary eFlow technology simplified the management and tracking of all suppliers.”

On the more general point of supplier relations, Dolan says PTSB is committed to helping them become ESG compliant so that they are suitable candidates for collaboration.

Concluding, Dolan says: “If they’re not there yet as a partner, we like to go on a journey with them and get them where they need to be. In the grander scheme of things, we are a small organisation, and we deal with lots of other small organisations, particularly in the FinTech space. 

“There’s an old Irish saying: ‘A rising tide lifts all boats’,” she says. “We don’t want to penalise suppliers for ESG transgressions, but instead educate them to ensure they’re compliant with sustainability regulations and our ethos. 

“It's really important we take a partnership approach to helping people in our supply chain, to help them understand how we can help each other for mutual benefit.”